Turkey's Erdogan assumes presidency, unveils cabinet

The new system was approved in a contentious referendum a year ago with 51.4 percent voting in favor of the reforms, which are the most significant changes to the political system in modern day Turkey.

The president will also have the power to dissolve parliament, issue executive decrees and impose a state of emergency.

The inauguration was to be followed by a lavish ceremony at his palace on Monday evening attended by dozens of world leaders marking the transition to the new executive presidency system.

After the election victory, Erdogan removed Mehmet Simsek, previous deputy prime minister and a former Merrill Lynch banker, as well as former Finance Minister Naci Agbal.

Erdogan made history in August 2014 by becoming the first president of the Republic of Turkey elected by popular vote. The lira is down 17 percent this year.

Foreign Minister will remain Mevlut Cavusoglu.

Turkish President Recep Tayyip Erdogan appointed his son-in-law to lead the country's $880 billion economy on Monday, fueling concerns among investors about Ankara's financial future.

The coronation of the presidential office as the nexus of political power takes place at a critical juncture.

Inflation in Turkey surged to over 15 percent in June for the first time in nearly one-and-a-half decades, raising new fears that the economy is overheating. But he's also overseen a strong economy and he has built up considerable support across the country.

Morocco's monarch sent his congratulatory message to Erdogan following his reelection as President of the Republic of Turkey on June 24.

At the center of the quarrel is the president's demand for a greater say over monetary policy and his insistence - against economic orthodoxy - that interest rates need to be lowered to tamp down inflation that's more than triple the government's 5 percent target. "In other words, Turkey will be an institutionalized autocracy".

Turkey is a member of the Western military alliance, NATO, but it has been at odds with the United States over military strategy in Syria and with the European Union over Ankara´s large-scale purges of state institutions, armed forces, police and media following the failed coup.

The five-year term served as a sort of "shield" for the central bank, helping to ensure its independence from politicians, said Ugur Gurses, a former central banker.

Erdogan was comfortably re-elected last month with 52.6 percent of the vote. "It is a sign that Erdogan will control economic policy even more", Guillaume Tresca, a senior strategist at French bank Credit Agricole, told Reuters.